US private label sales up

Posted by Nicole Eckersley on 15th June 2011

Private-label food is here to stay in the US, according to recent research that found that almost 45% of consumers are purchasing more own-label products than before the economic slowdown.According to a survey released by AlixPartners today (13 June), nearly 45% of consumers say the shaky economy has motivated them to continue to consider and ultimately purchase more private-label and other lower-priced food items.

“The American consumer is staunchly committed to value and is more open to private-label and other less-expensive food products than ever before,” said AlixPartners’ Consumer Products Practice head and managing director David Garfield. “Consumers’ uncertainty about the US economy and their personal economic situations, coupled with food- and commodity-price volatility, creates an environment of both challenges and opportunities for food-makers across the board.”

The research found that consumer consideration of private-label products is significant across all major food categories including dairy, frozen foods, fresh produce, flour, ambient products and refrigerated meat.

Price and quality remain the most important considerations for consumers considering private-label items, with more than 60% polled in the AlixPartners survey saying that price is the most important factor. It also found that US consumers have a clear perception of the cost savings from buying own label, estimating an accurate average of 20% cost savings across food categories.

AlixPartners Consumer Products Practice director Parmeswaran Bhaskaran said that consumers are smarter about price and value than before the recession. “The recession trained them to research and seek out deals and, even when their financial situations improve, it’s safe to say that consumers may not abandon their value-conscious instincts.”

The study found, however, that consumers still have concerns about the quality of private-label products, with more than 40% of those polled citing questionable quality as the primary consideration that would prevent them from buying a private-label product over a similar brand.

“Private-labels are showing a lot of strength and these companies have a lot of opportunities for growth, but that doesn’t mean it will be easy,” said Bhaskaran. “The challenge for private-label producers is to continue to draw in consumers by convincing them of quality-parity.”
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